Good Data Fails to Evoke RiskOn Mood; ECB Minutes

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Note The table above is updated before publication with the latest consensus forecasts. However, the text charts are prepared ahead of time. Therefore there can be discrepancies between the forecasts given in the table above and in the text charts.

Rates as of 0500 GMT

Market Recap

Once again the action was in the bond market, not the stock market. US stocks closed modestly lower, with the SP 500 again effectively unchanged and NASDAQ down 0.6. In Asia this morning most markets are down, with several off more than 1.

Meanwhile, the recent rise in yields globally reversed slightly yesterday despite betterthanexpected data from

Japan machinery orders up 5.2 mom instead of down 6.1 mom as expected, while the Reuters tankan showed sentiment among Japanese manufacturers turned positive in February for the first time since July 2019;
the US retail sales soared 5.3 mom vs 1.1 expected while producer prices jumped 1.3 mom vs 0.4 expected; and
Canada headline CPI 1.0 yoy vs 0.9 yoy expected, up from 0.7 previously.

Yield curves have been steepening so far this year, but yesterday there was a trend of bull flattening the yield curve flattening because of longerdated yields coming down. There can also be bear flattening, when the yield curve flattens through shorterdated yields moving higher.

What might have caused the reversal? Why would rates have fallen in response to betterthanexpected economic news? It could be that the rise in yields in recent days has slowly…


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